Propagation of Disruptions in Supply Networks of Essential Goods: A Population-Centered Perspective of Systemic Risk

34 Pages Posted: 24 Mar 2022

See all articles by William Schueller

William Schueller

Complexity Science Hub Vienna

Christian Diem

Complexity Science Hub Vienna; Vienna University of Economics and Business

Melanie Hinterplattner

Upper Austria - University of Applied Sciences Upper Austria

Johannes Stangl

Complexity Science Hub Vienna

Beate Conrady

University of Copenhagen

Markus Gerschberger

Upper Austria - University of Applied Sciences Upper Austria

Stefan Thurner

Institute for Science of Complex Systems, Medical University of Vienna; Santa Fe Institute

Date Written: January 31, 2022

Abstract

The Covid-19 pandemic drastically emphasized the fragility of national and international supply networks (SNs), leading to significant supply shortages of essential goods for people, such as food and medical equipment. Severe disruptions that propagate along complex SNs can expose the population of entire regions or even countries to these risks. A lack of both, data and quantitative methodology, has hitherto hindered us to empirically quantify the vulnerability of the population to disruptions. Here we develop a data-driven simulation methodology to locally quantify actual supply losses for the population that result from the cascading of supply disruptions. We demonstrate the method on a large food SN of a European country including 22,938 business premises, 44,355 supply links and 116 local administrative districts. We rank the business premises with respect to their criticality for the districts’ population with the proposed systemic risk index, SRIcrit, to identify around 30 premises that—in case of their failure—are expected to cause critical supply shortages in sizable fractions of the population. The new methodology is immediately policy relevant as a fact-driven and generalizable crisis management tool. This work represents a starting point for quantitatively studying SN disruptions focused on the well-being of the population.

Keywords: supply networks, disruption propagation, systemic risk, population well-being, transformative supply chain research

JEL Classification: M11

Suggested Citation

Schueller, William and Diem, Christian and Diem, Christian and Hinterplattner, Melanie and Stangl, Johannes and Conrady, Beate and Gerschberger, Markus and Thurner, Stefan, Propagation of Disruptions in Supply Networks of Essential Goods: A Population-Centered Perspective of Systemic Risk (January 31, 2022). Available at SSRN: https://ssrn.com/abstract=4022513 or http://dx.doi.org/10.2139/ssrn.4022513

William Schueller

Complexity Science Hub Vienna ( email )

Josefstädter Straße 39
Vienna
Austria

Christian Diem (Contact Author)

Complexity Science Hub Vienna ( email )

Josefstädter Straße 39
Vienna
Austria

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Melanie Hinterplattner

Upper Austria - University of Applied Sciences Upper Austria ( email )

Franz-Fritsch-Strasse 11
Wels, A-4600
Austria

Johannes Stangl

Complexity Science Hub Vienna ( email )

Josefstädter Straße 39
Vienna
Austria

Beate Conrady

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Markus Gerschberger

Upper Austria - University of Applied Sciences Upper Austria ( email )

Franz-Fritsch-Strasse 11
Wels, A-4600
Austria

Stefan Thurner

Institute for Science of Complex Systems, Medical University of Vienna ( email )

Spitalgasse 23
Vienna, A-1090
Austria

Santa Fe Institute ( email )

1399 Hyde Park Road
Santa Fe, NM 87501
United States

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